Mutual funds vs real estate: Where should you invest your money?
When it comes to investing, people need to consider various factors before investing their money in any form of investment. While shortlisting investment options, you come across many instruments like stocks, mutual funds (MF), gold, fixed deposits (FD), real estate and others. If we talk about the long-term perspective, some people prefer mutual funds, while others may want to invest in real estate. Below is a comparative analysis of real estate and mutual funds as investment vehicles.
“While all investment instruments have their pros and cons, your decision should be guided by factors such as potential return, consistency, safety, and budget range. Despite short-term challenges due to the pandemic, real estate is still almost like a fixed-term deposit. On the other hand, investing in a mutual fund is much riskier,” said Shubham Arora, director of Sheerbulls India Pvt Ltd.
Every investor must take into account the liquidity aspect of an investment instrument.
Atul Goel, Managing Director, Goel Ganga Group and President (elect), NAREDCO Pune said that mutual funds and real estate are very different in terms of liquidity. Although mutual funds appear to be more liquid, the risk ratio and market exposure make liquidity challenging.
“However, this is not the case for real estate assets. “It may take a few months to acquire a client and close the deal, but the value remains the same, and unlike mutual funds, funds cannot disappear overnight,” Atul Goel said.
However, it should be noted that people have to sacrifice their fair share of money on brokerage. He added that investors should also beware of panic sales as they drive down asset values.
The general perception has been that real estate investing remains a consistent performer over the years.
With the exception of a few periods of economic slowdown, property prices in cities have skyrocketed. Although consistency largely depends on factors such as connectivity, physical infrastructure, social facilities, road network, neighborhoods, and planned projects, it is considered safer than the unpredictable mutual fund/stock market,” said Suren Goyal, Partner, RPS Group..
Real estate industry experts believe that from a long-term perspective, real estate investments and real estate investments are and will continue to be preferred by investors.
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